15 Must-Read Bitcoin & Crypto Trading Tips (Updated 2020)

Safety rules are written in blood. That statement is familiar to every soldier serving his or her country. Although we are not talking about a risk to human life, losing one’s expensive bitcoins by making trading mistakes is definitely not fun.

So how can one avoid such mistakes and stay in the green? First, it is essential to note that trading requires your attention and 100% focus. Secondly, trading is not for everyone. The following tips are easy to internalize because these tips were “written in blood” (my blood). However, it’s difficult to apply them in real time. After all, humans are not rational.

Have a Reason For Every Trade

Enter a trading position only when you know why you’re entering it, and have a clear strategy in mind. Not all traders are profitable since this is a zero-sum game (for everyone who benefits, someone else loses on the other side). Large whales drive the altcoin market – yes, the same ones responsible for placing huge blocks of hundreds of Bitcoins on the order book.

The whales are just waiting patiently for innocent little fish like us until we make trading mistakes. Even if you aspire to trade daily, sometimes it is better to do nothing instead of jumping into the rushing water and exposing yourself to substantial losses. There are days when you only keep your profits by not trading at all.

Clear Stops, Clear Targets: Have a Plan

For each position, we must set a precise target level at which to take profit and, more importantly, a stop-loss level for cutting losses. Setting a stop-loss involves selecting the maximum amount of losses we can afford before the position gets closed.

Several factors must be considered in order to correctly choose a stop loss level. Most traders fail when they fall in love with their position or the coin itself.

They may say, “It will turn around and I will get out of this trade with a minimal loss, I’m sure.” They’re letting their egos take control of them, and compared to the traditional stock market where 2-3% is considered extreme volatility, crypto trades are a lot riskier: it’s not unusual to find a coin dumping by 80% just in a few hours, and nobody wants to be the one who is left holding it.

FOMO: Be Aware

Meet FOMO, or Fear of Missing Out. Indeed, it isn’t fun to see such situations from the outside – when a specific coin is being pumped up like crazy with huge two-digit gains in just minutes.

That bold green candle yells at you, “You are the only one not holding me.” At exactly this point you will notice lame people flooding Reddit and Telegram trading groups and the exchanges’ trollboxes to talk about the ongoing pump.

A classic pump and dump. Source: Steemit

What do we do then? It’s very simple: Keep moving forward. True, it’s possible that many people ahead of us may have caught the rise and that the market could continue in one direction, but bare in mind that the whales (as mentioned above) are just waiting for small buyers on the way up to sell them the coins they bought for lower prices. The price has become high, and it’s clear that the current lucky holders only consist of those little fish. Needless to say, the next step is usually the bright red candle which sells through the whole order book.

Risk Management: It’s Not Just For Crypto

Pigs get fat; hogs get slaughtered. This statement tells the story of profits from our perspective. To be a profitable trader, you never look for the edge of the movement. You look for the small gains that will accumulate into a big one.

Manage risk wisely across your portfolio. For example, you should never invest more than a small percentage of your portfolio in a non-liquid (very high risk) market. To those positions we will assign greater tolerance; the stop and target levels will be chosen far from the buying level.

Cryptocurrencies Are Traded Against Bitcoin

The underlying asset creates volatile market conditions: Most altcoins are mostly traded against Bitcoin, rather than fiat.

Bitcoin is a volatile asset compared to almost any fiat currency, and this fact should be taken into consideration, especially when the price of Bitcoin is moving sharply.

In past years, it was common for Bitcoin and altcoins to exhibit an inverse correlation, i.e., when Bitcoin rose, altcoins prices would fall against Bitcoin, and vice versa. However, since 2018 the correlation has been unclear.

Regardless, when Bitcoin is volatile, trading conditions are kind of foggy. During periods of fog, we can’t see far ahead, so it is better to have close targets and stop-losses set – or to not trade at all.

Foggy Market

Must-Have Tips For Trading Altcoins

Most altcoins lose value over time. They may bleed in value slowly or rapidly, but the fact that the list of the largest 20 altcoins by market cap has changed so much over the past few years tells us a lot.

Take this into account when holding large amounts of altcoins for the medium and the longer term, and, of course, choose them wisely.

If you are considering holding altcoins for the longer term or building a long-term crypto portfolio, keep in mind that the projects or altcoins that have higher daily trading volumes and significant community backing are probably here to stay.

You should follow the coin’s chart and identify low and stable periods. Such periods are likely to be consolidation or accumulation periods on the part of whales, and when the right time comes, accompanied by positive project announcements, the pump will start, and the whales will sell for profit.

ICOs, IEOs and Token Sales

A word about public ICOs (or IEOs, as they are now known in 2019): These are crypto token sales. Many new projects choose to hold a crowd-sale where they offer investors an early opportunity to buy a share of the project’s tokens at what is meant to be a reasonable price.

The motivation for investors is that the token will get listed on the secondary market, i.e. the crypto exchanges, and will yield a nice profit for early investors. In recent years, there have been many successful token sales: ROIs of 10x were not uncommon.

One example was Augur’s ICO, which yielded investors a phenomenal 15x return on investment. Okay, but what’s the catch? Not all such projects reward their investors. Many sales proved to be complete scams. Not only were they not being traded at all, but some projects disappeared with the money, never to be heard from again.

So how do you know whether you should invest in a given token sale? We recently wrote about this, and a key factor is the amount of money the project aims to raise. A project which raises too little will probably not be able to develop a working product, while a project which raises a huge amount won’t have enough investors left out there to buy the tokens on the secondary market. Most important of all is risk management. Never put all your eggs in one basket and invest too much of your portfolio in one IEO or ICO. They are considered high risk.

Start Today, Right Now

Here are some practical tips you can implement right away:

Fees, fees, fees: Making multiple trades means paying more fees. It’s always advisable and cheaper to post a new order to the order book as a market maker, and not to buy from the order book (taker).

No pressure: Don’t start trading unless you have the optimal conditions for making the right decisions, and always know when and how to get out of the trade (have a trading plan). Pressure always hurts your trading game. Never rush! Wait for the next opportunity; you will get there.

Setting targets and placing sell orders: always set your targets by placing sell orders. You don’t know when a whale will pump up your coin to clean up the supply on the order book (and pay a reduced fee on the “maker” side, remember?).

Augur Sell-off. Down 75% in one second, then back up

A successful strategy involves placing low buy orders. The above chart is taken from the Poloniex exchange in December 2016: a crazy flash crash took place, and Augur’s price declined by 75%. After a short while, the market recovered completely. Anyone who had set low buy orders could easily double or triple his or her investment. Placing low buy orders requires special care; don’t wake up when you’re far away from the market to find that your buy order has executed and now the price is even lower.

Buy the rumor, sell the news. When major news outlets publish news, it’s usually the right time to say goodbye to the coin involved.

You have made a profitable trade, but as always, the moment you sold, the coin runs up again. First, meet Murphy’s Law. Second, read over what was written here previously and never enter a position under pressure or chase the FOMO. As long as there is profit, you are okay. Go on to your next trade and don’t find yourself losing it.

Leave your ego aside. The goal here is not to be right with your trades, but to gain profit. Do not waste resources (time and money) trying to prove you should’ve been entering this or that position. Remember, no trader doesn’t sometimes lose. The equation is simple – the number of winning trades should be higher than losing trades.

Bear markets are sometimes the best times to make profits: If you haven’t heard about it, learn how you can short Bitcoin and other cryptocurrencies.

New Bitcoin & Altcoin Trading Tips For 2019

Ignore Financial News and Other Traders

Don’t waste your time reading the news. The vast majority of the published analysis and news posts you will find in the traditional press is biased or promoted by a particular company or group. Better to invest your time in learning the long-term trends by reading financial pieces, not everyday news. You won’t find your next investment opportunity by reading the news. The opposite is true: if it appears in the news, then others must know about it, so it probably has no value. Buy the rumor, sell the news, remember?

Additionally, it’s best not to complicate your analysis by listening to other traders’ success stories. Competing with others can only lead to unhealthy FOMO trades. Your skills will only improve if you concentrate on yourself, rather than buying coins because one of your friends suggested it.

Have a Long-Term End Goal

In the end, remember that you are trading for a reason while investing funds that you could completely lose. Examples of goals could be quitting your job, buying a house, or retiring.

Thus, set your short and long-term goals and trade accordingly, i.e., do not risk funds you will need in the short term. Your overall goal should be aligned with all of your trading positions as well as your risk management.

Identify Crypto Scams in Seconds

Altcoins are very tempting, but remember that the cryptocurrency world received an enormous amount of attention, which brought many scammers into the field. The idea that “you are responsible for your funds, not the bank” is indeed revolutionary, but it can also lead inexperienced newbies to send their funds away, thinking about a “high ROI” or investing in an ICO or IEO that will “change the world.” Unlike traditional finance, cryptocurrency has no insurance. Once you send your funds, they are no longer yours.

Learn how to identify crypto scams. Unfortunately, there are plenty of them around. Many entrepreneurs want your funds; not all of them want them for the right reasons. Don’t waste time; think about why you should not be investing instead of contributing your valuable cryptocurrency.

What You Need to Know About Your Long-Term Portfolio

In the long term, only a few cryptocurrencies will survive. Looking at the top 20 coins ranked by market cap, you can easily see that beyond first place, which of course belongs to Bitcoin, most of the rest change from year to year. Since many won’t survive, you need to think wisely about which altcoins to include in your long-term crypto portfolio and what percentage portion of your portfolio each of those altcoins will comprise. You can’t time the market; another crypto bubble could develop at any time.

The Profit Is Temporary Until You Meet the Fiat

The fiat value of your crypto portfolio is key. As long as the everyday world’s money is fiat (dollars, euros and such), you should measure your total portfolio’s value in terms of fiat currency.

Remember, until the fiat reaches your bank account, you have not cashed out. Cryptocurrency has no insurance, and if you are not following security rules, you can quickly lose your funds despite being a successful crypto trader. Many investors saw their fiat holdings disappear despite holding them on exchanges after selling their crypto. The most famous example of this was the Mt. Gox collapse in 2014. However, Quadriga CX’s recent incident reminds us that when it comes to exchanges, things happen.

Create a Group With Your Trading Buddies

There is a lot of information associated with the crypto world, and things move very quickly. In order to stay up to date, find a reliable group of friends with whom to share trading ideas as well as fundamental and technical data. Whether on Telegram or WhatsApp, chart groups contain members who are worth listening to – and others who should be ignored.

Enjoyed These Tips? There’s More

We will appreciate your share! We’ve also published more trading tips and a guide to common trading mistakes, which you can read here.

Do you have other trading tips? Feel free to mention them in the comments below.

About The Author

Yuval Gov has over 15 years of trading experience in the stock exchange, graduated from TAU - Economics and Management. Fell in love with the crypto space. Does Crossfit to get away from FOMO. Contact Yuval: LinkedIn

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